Poor Mannkind (MNKD). The lamest endocrinology company in existence just did a deal so awful it rivals the infamous Repros 99.6% Discounted Warrant deal from 2011. Read about that stinker here.
Tonight, the 9th of May 2016, with the shares closing at $1.32, the morons at Mannkind announced a unit offering at $1.03 per unit. Says the company:
Each share of common stock is being sold together with a warrant to purchase 0.75 of a share of common stock (A Warrants) and a warrant to purchase 0.25 of a share of common stock (B Warrants) for a combined purchase price of $1.03. Each unit consists of one share of common stock. 3/4 of a Series A warrant, and 1/4 of a Series B warrant.
Both warrants are struck at $1.50
The Series A warrants expire in 2 years, and have typical American-style exercise rules. The Series B warrants expire in December 2018. The B warrants have a variation of a European-style exercise rule.
So what is this prize package worth to the buyers?
A share of stock is worth $1.32 at last close.
The Series A Warrants are worth, according to Bloomberg:
$0.93 each, and 0.75 x 93c = 69.75c
The Series B Warrants are worth, according to Bloomberg:
$1.03 each, and 0.25 x 1.03 = 25.75c
Thus the entire package, sold to investors this evening at $1.03 is actually worth:
+.6975 (Series A Warrant)
+.2575 (Series B Warrant)
giving the lucky buyers an immediate paper profit of 120%, and giving existing MNKD bagholders incredible dilution.